1. What is Home Loan Eligibility?

The home loan eligibility calculator determines how much you can borrow based on your monthly payment capacity, interest rate, loan term, and debt-to-income ratio. It helps salaried individuals understand their borrowing capacity before applying for a mortgage.

2. How Does the Calculator Work?

The calculator uses the present value of an annuity formula:

Where:

• \( P \) — Loan principal amount (USD)
• \( PMT \) — Affordable monthly payment (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)

Explanation: The formula calculates the maximum loan amount that can be repaid with the given monthly payment at the specified interest rate over the loan term.

3. Importance of Loan Eligibility Calculation

Details: Knowing your loan eligibility helps in financial planning, prevents loan application rejections, and ensures you don't overextend your finances.

4. Using the Calculator

Tips: Enter your comfortable monthly payment, current interest rates, desired loan term, and your debt-to-income ratio. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good debt-to-income ratio?
A: Most lenders prefer a DTI below 43%, with housing expenses not exceeding 28% of gross income.

Q2: How does interest rate affect loan eligibility?
A: Higher interest rates reduce your borrowing capacity as more of your payment goes toward interest rather than principal.

Q3: Should I include taxes and insurance in the monthly payment?
A: Yes, for accurate results include estimated property taxes and insurance (PITI) in your monthly payment amount.

Q4: How does loan term affect eligibility?
A: Longer terms increase borrowing capacity but result in higher total interest paid over the life of the loan.

Q5: What other factors affect loan approval?
A: Credit score, employment history, down payment amount, and property type also significantly impact loan approval.